SGB 2021-22 Series VII Premature Redemption Price ₹14,167: First Exit Is Now Taxable

The SGB 2021-22 Series VII premature redemption price is ₹14,167 per unit for the redemption due on Monday, 2 November 2026, the Reserve Bank of India announced in Press Release No. 2026-2027/1419 dated 30 October 2026. One unit is one gram of gold, so an investor exiting 40 units on Monday will receive ₹5,66,680 in the bank account linked to the bond.

This is the first early exit window for the tranche. Series VII was issued on 2 November 2021, and the scheme allows premature redemption only after the fifth year from the date of issue, and then only on a date on which interest falls due. The RBI fixed the price as the simple average of the closing price of 999 purity gold published by the India Bullion and Jewellers Association Ltd (IBJA) for the three business days before redemption: 28, 29 and 30 October 2026. The terms come from the Government of India notification F.No. 4(5)-B(W&M)/2021 dated 21 October 2021, which governed the Series VII issue.

SGB 2021-22 Series VII return at ₹14,167

The tranche opened for subscription from 25 to 29 October 2021. The RBI press release of 22 October 2021 fixing the Series VII issue price set the nominal value at ₹4,761 per gram, based on IBJA prices for 20, 21 and 22 October 2021, with a ₹50 per gram discount for investors who applied online and paid digitally. Their cost was ₹4,711 per gram.

Against Monday's price, the table sets out what each type of original subscriber earns from gold price movement alone.

That works out to a compound annual return of about 24.4% for the ₹4,761 price and 24.6% for the ₹4,711 price over the five years, before the 2.5% annual interest. The interest is paid every six months and is taxed separately as income in the year it is received, so it does not enter the capital gains computation.

Monday's price is ₹46 lower than the ₹14,213 fixed for the tranche redeemed on Friday, 30 October. The RBI price for SGB 2019-20 Series VI due on 30 October 2026 was based on IBJA closing prices for 27, 28 and 29 October; dropping 27 October from the averaging window and adding 30 October pulled the Series VII figure down slightly.

Is SGB premature redemption taxable in 2026?

Yes, for every holder exiting on 2 November 2026. Until 31 March 2026, an individual redeeming a sovereign gold bond with the RBI, whether on maturity or through the five-year early exit route, paid no capital gains tax on the rise in the gold price. Budget 2026 narrowed that relief. As Business Standard reported on Budget day, the exemption now survives only where the bond was subscribed by an individual at its original issue and held continuously until redemption on maturity; if the investor exits before maturity, the exemption does not apply. Value Research's analysis of the change places it in section 70(1)(x) of the Income-tax Act, 2025, effective 1 April 2026, and notes that long-term gains on bonds held for more than 12 months are taxed at 12.5%.

A Series VII redemption on Monday fails the maturity condition by three years. The bond runs for eight years from 2 November 2021, so final maturity is 2 November 2029. Even an investor who applied in October 2021 and never moved the bond out of the original holding will therefore have a taxable long-term capital gain for Tax Year 2026-27, because the holding period is five years. Investors who bought Series VII units on the stock exchange lose the exemption on both routes, premature redemption and maturity, since they were not original subscribers.

Worked example: tax on redeeming 100 units on 2 November 2026

As an illustration, take a resident individual who applied online in October 2021 for 100 units at ₹4,711 and redeems all of them on 2 November 2026. Proceeds are 100 × ₹14,167 = ₹14,16,700. Cost is 100 × ₹4,711 = ₹4,71,100. The long-term capital gain is ₹9,45,600. Tax at 12.5% is ₹1,18,200, and with 4% health and education cess the liability is ₹1,22,928, assuming total income stays below the surcharge threshold.

The investor keeps ₹12,93,772 after tax, or about ₹12,938 per unit. Had the same units been held to maturity in November 2029, the entire gain would have been exempt. Leaving aside interest and the time value of money, waiting would leave the investor better off unless the maturity price fell below roughly ₹12,938, a drop of about 8.7% from ₹14,167. A holder who exits on the exchange instead of with the RBI faces the same 12.5% rate on a long-term gain, so the exchange route does not avoid the tax.

Advance tax and return reporting for the Series VII gain

The gain arises on 2 November 2026 and falls into the third advance tax instalment of Tax Year 2026-27. An individual whose total tax liability for the year crosses the advance tax threshold should include it in the cumulative 75% due by 15 December 2026, or pay interest on the shortfall. Salaried investors should check this separately, since the gain is not part of the salary on which the employer deducts tax; any amount not covered by advance tax has to be paid as self-assessment tax before the return is filed.

The cost of acquisition is the price actually paid: ₹4,761 for branch, post office and agent applicants, and ₹4,711 for online applicants who received the discount. For units bought on the exchange, the cost is the purchase price on the exchange and the holding period runs from that purchase date; units held for 12 months or less produce a short-term gain taxed at slab rates. In the return, the date of transfer for the redemption is 2 November 2026, and the 2.5% interest received during the year is reported separately as income.

Next exit dates and maturity for SGB 2021-22 Series VII

Requests for this window had to be lodged with the issuing bank, Stock Holding Corporation of India, designated post office or agent before the interest payment date, under the timelines each channel fixes. A holder who missed Monday's window has three choices: wait for the next interest payment date on 2 May 2027, sell the bond on the exchange if it is held in demat form, or hold it to maturity on 2 November 2029. Only the last route keeps the capital gains exemption, and only for an individual who subscribed at original issue. The RBI announces the redemption price one business day before each window, using the IBJA average for the three preceding business days, and redemption proceeds go to the bank account registered with the bond.

Official source: View the official source document